The large-scale mining industry in Tanzania just got interesting.
On October 20th, the government of Tanzania and the mining companies previously managed by Acacia Mining, but now managed by Barrick Gold Corporation, strike a new partnership, to settle all disputes, which saw major reforms in the sub-sector in the past 3 years.
According to the government of Tanzania, the agreements have been submitted to the Tanzanian attorney general for review and legalization.
The new partnership comes, after—Acacia (now Barrick Gold), Tanzania’s largest gold producer was cleared by the Magufuli government and resumed its metal concentrates exportation after a series of regulations led by The Mining Commission of Tanzania Ministry of Minerals that impeded the export of the mineral.
Further, according to Barrick Gold, the terms of the agreement include payment of $300 million to settle all outstanding tax and other disputes; the lifting of the concentrate export ban; the sharing of future economic benefits from the mines on a 50/50 basis; and the formation of a unique, Africa-focused international dispute resolution framework.
In alignment with the agreements, a new operating company named Twiga (Swahili word for “Giraffe”)—which resonates with the national symbol, has been created to manage the Bulyanhulu, North Mara and Buzwagi gold mines.
Tanzania will acquire a free carried shareholding of 16 per cent (Barrick Gold taking 84 per cent) in each of the mines and will receive its half of the economic benefits from taxes, royalties, clearing fees and participation in all-cash distributions made by the mines and Twiga. An annual true-up mechanism will ensure the maintenance of the 50/50 split.
The new partnership begs the question—can the large-scale mining industry soar, after the big players strengthening the affairs with government?. Thus, Tanzania stands as the fourth-largest gold producer in Africa after Ghana, with values estimated at USD 960 million.
In 2018, overall Acacia gold receipts to the government totaled approximately $ 662 million paid as economic benefits, while $ 411 million was introduced directly into the country’s economy via suppliers, employees, and taxes.
Per Barrick Gold press release, the chairman of the Negotiating Committee of the Government of Tanzania, Prof Palamagamba Kabudi, Barrick president and chief executive Mark Bristow, said the agreements introduced a new era of productive partnership with Tanzania and would ensure that Tanzania and its people would share fully in the value created by the mines they own.
Further, it also marked the end of the long impasse between the government and Acacia which had led, among other things, to the closure of North Mara and the freezing of export concentrate from the two other operations.
“This is a milestone in the struggle we had to ensure Tanzania benefits from the mining sector. I also want to assure shareholders of Barrick of trusted confidence under the new partnership,” Prof Palamagamba Kabudi, said in the press briefing.
Patently, Barrick Gold stands to resume its foot-hold in the sector strongly under the new partnership as Mark Bristow highlights the latter.
“Rebuilding these operations after three years of value destruction will require a lot of work, but the progress we’ve already made will be greatly accelerated by this agreement. Twiga, which will give the government full visibility of and participation in operating decisions made for and by the mines, represents our new partnership not only in spirit but also in practice,” Bristow said in Barrick press release
Barrick Gold took over the management of the mines after its buy-out of the Acacia minorities last month. Whereby it has managed to negotiate, the re-opening of North Mara and working with communities surrounding mines to restore their social license.
Barrick Gold to prove itself to the Tanzanian people
It is just a matter of time, for Barrick Gold to prove itself to the Tanzanian people in terms of fair-dealing and their crucial role to the large-scale mining sphere in Tanzania.
Unequivocally, Barrick Gold—highlighted in its press release that: all commitments made in terms of, future plans, projects, strategy or operating performances in relation to the latter, resonate as (forward-looking statements), which are necessarily based upon a number of estimates and assumptions including material estimates and assumptions related to the factors such as management’s experience and perception of current conditions and expected developments, are inherently subject to significant business, economic and competitive uncertainties and contingencies.
